I'm a recent convert to the world of online high-yield savings accounts. Now that I have my debt paid off, I can finally afford to save some money. It was difficult for me to choose an account: Should I go with the highest interest rate? Or should I opt for the best customer service?

I'm not a rate-chaser, so I chose ING Direct. Their current 4.10% rate is lower than most places, but I've heard nothing but praise for the company's service and ease-of-use. I have a few hundred dollars stashed there as the start of my emergency fund, though I plan to add more in the coming year.

The Advantis Fusionchecking account offers a 6.25% APY on the first $30,000 deposited, and 1.01% APY on anything additional. There are no minimums and no fees but you must meet a few requirements. For example, you must live in the Portland-metropolitan area to open an account. In order to receive the 6.25% APY each month, you must also:

Use your check card 12 times or more.

Have one of the following occur monthly on your account: direct deposit, ACH deposit/withdrawal, automatic bill payment.

Receive your statements electronically.

Log in to online banking at least once per month.

The FAQ for the account provides more information. I can meet most of the requirements with ease, but I worry about the “12 transactions a month” clause. I'm trying to reduce my spending — will I really use a debit card three times a week? Probably, but I'm not certain.

This deal almost sounds too good to be true, but I'd be a fool not to look into it. So, next Tuesday I'm making a Get Rich Slowly field trip. I had hoped that working from home would allow me to do some research, and here's an opportunity to do so. And it's a trip that just might make me money.

In 2006, J.D. founded Get Rich Slowly to document his quest to get out of debt. Over time, he learned how to save and how to invest. Today, he's managed to reach early retirement! He wants to help you master your money — and your life. No scams. No gimmicks. Just smart money advice to help you reach your goals.

It sounds good, but I’d still be wary. You’re trying to save, and forcing you to make 12 transactions seems defeatest. For me, there are too many rules. If you don’t login, what happens to your rate? I’d stick with ING. Rules and regulations scare me when it comes to my $$.

I just saw this deal last night, and am contemplating it. My concerns are twofold. One, I know that some merchants charge fees, upwards of 50 cents to use a debit card. This could eat into any interest gains. Second, I don’t like the idea of scrambling to buy some stuff at the end of the month to get my interest rate. I currently get 1% back + Upromise bonuses on my credit card purches which I subsequently pay off monthy. This 1% bonus on top of ING’s 4+ % gets pretty close to 6.25% without the hassle (and without the incurred usage charges at the register.)

Hm. Some how I managed to edit out my current system. I use a 1% cash back card for most purchases. My emergency fund money (which will eventually be my largest pile of cash, but is currently rather small) goes into ING at 4.10%. So Ethan has a point, perhaps.

They are pretty common accounts. Oregon Community, Rivermark, Advantis, and TwinStar up in Washington all of the same type of account. The Reward Checking concept comes from a company that sells it across the nation to community banks and CU’s. Think about the 80/20 rule and 20% of the people won’t hit the requirements, so it lowers the average cost of funds for the FI to the low to mid 4’s. That’s kind of expensive money for an FI, but with all of the requirements, you are also getting the PFI, or primary financial institution, which is what all FI’s are after.

Same requirements as your Portland bank to get the higher rate; I get 6.10%.

I also get 1% back on my credit card but this seems like a better deal for me. I’m pretty frugal but 12 transactions a month isn’t much as I grocery shop at least 2x/week. That just leaves one other random purchase (on average) per week. I set a recurring calendar item in my email client (Outlook) to remind me to login once a month so I don’t forget.

I’m aware that I no longer have the separation between my ‘savings’ funds and my checking funds since it’s all in the same account, but I feel confident that I won’t abuse access to the $$$. This wouldn’t be a good choice IMO for someone who needs the barrier of the extra step to get $ from a different account before spending it on unnecessary discretionary items.

BTW, my credit union waives the requirements for the first month, so it gives you time to adjust.

that seems like too much work to me. BOA does things like that with their checking and savings accounts vis a vis fees, and you’d be surprised how many times you miss those requirements in a year.

However, if you meet all the requirements monthly, you get about $250 (pretax) extra on $10,000 between 6.25% & 4.10%. Not bad. And if you get 0% if you don’t meet the requirements for a month, then you can miss 4 months a year to come out even. Might be worth a shot.

I’ve seen both Advantis and Rivermark offering very high yields but with the same weird requirements to use a debit card 12x/month, etc. I’m afraid that if I don’t jump through all the hoops I’m going to make that 0.10%.

The other thing that has made me cautious about these deals is the question of how they can afford to pay those kinds of rates? It means that they’re probably making some risky loans. Otherwise I don’t see how they can pay essentially the same rate as a 30year fixed mortgage rate. They must be making loans that are at around 9 to 10% to make this profitable for them and if they’re doing that they must be making the equivilent of subprime loans.

@Phil — They can afford to do it because not everyone qualifies for the top rate. The average rate they pay out is about 4.5% overall. Most FI’s need about a 3% spread between deposit and loans rates to stay afloat so they have to be making 7.5% on loans, which is actually pretty darn high for a CU. They probably only make 6.5% or 7 so they make the rest up in fees.

In order to evaluate something like this, I would look just not at the APY but also what you plan to put it in it. Since the maximum is $30K, the difference over a 5.00% APY CD would be $375 – maybe something to think about. But if you’re putting in $5,000.00, the reward is only $62.50 – is that worth the hassle? Sometimes I see people get too focused on the APY without looking at the absolute dollar reward (the one mentioned above with 7.50% APY but $500 limit is just laughable).

Personally this is far too complicated for me. As others said, I’d just use a normal rewards card and keep my cash in a CD or MMA.

That’s a killer rate, and probably why the deal seems almost too good to be true. Sure, it would be possible, but isn’t a 12 transaction minimum counter productive to an emergency savings fund (or any savings). I don’t know…with all of those requirements it kind of feels like they are trying to ‘catch you’ in order to drop the nice rate as soon as they can.

Shouldn’t be too difficult if:
1. You fill your car with gas once per week, keeping it topped off with fuel (don’t know about yours, but mine runs so much better on the top half than the bottom half).
2. Pick up fresh milk and produce weekly.
3. Set up utilities, LAN, and other services for charge to your check card.
4. If you need a quick card use, make a small donation to a local charity such as Salvation Army, public TV, or shelter on occasional basis. A $5 donation would pay for itself by keeping you eligible.

Don’t you have a financial record to look back on to see if 12 transactions a month is too many? I net about 10 on average, but I’m slightly abnormal — I fill my gas tank every other month. I’d imagine someone with a job and other expenses can meet the transaction requirements easily. But what can eat you alive is expenses. I can’t figure out the cost of a debit transaction with that bank, but with a principle of 5 thousand and 12 transactions, you could wind up losing half the interest to debit transaction fees. Ouch.

The BECU 7.5% rate is NICE if you are using the account anyways and then they put that in as a nice bonus. It is also the reason I set up an early saver accountfor my son instead of keeping the funds comingled — higher interest on the first $500 (And kids have smaller amounts of money they are working with anyway) It’s added up over the last few years I’ve had it.

1. Is it a teaser rate? e.g. 3 months.
2. I’ve read that anything over 4.6% probably has junk in the portfolio. Make sure it is FDIC insured.
3. Amtrust Direct has a 3 mo. teaser rate of 5.11% – 4.51% after. I have a money market account linked to a no interest checking account. I pay everything I can with ach transfers – including deposits. Yes, they give you checks. I transfer money from the MM account to checking as needed. Works fine. No glitches, no “strings” that I have found.

The State Bank of Toledo had a similar deal, and anyone could join – you didn’t have to be local. They only required that you have 1 direct deposit and make 10 debit card transactions. The rate they were giving was 6.01% up until a month or two ago, but now they’re down to 5.01%, so it’s not really worth the hassle any more.

I agree with some others that this seems too complicated. My motto in personal finance is to Keep It Simple! As Dave Ramsey says, no one ever got rich using credit card reward points (or a slightly better APY, as the case may be). If it encourages you to make even one $5 purchase you wouldn’t have ordinarily, it’s undermining your efforts to save as much as you possibly can (and possibly canceling out your increased interest).

JD, you’ve mentioned how you still have to consciously combat your old spendthrift tendencies…IMHO, this wouldn’t help you in the long run.

I don’t know if it’s the best deal in Portland, but it’s certainly a great deal. Like you, however, I would have some difficulty using the check card 12 times in a month; I think I’ve used a debit card one time ever in my life.
–
Ryanhttp://uncommon-cents.net/

I know its not insured, but a money market account is relativley safe, has check writing/debit card ability, and can earn you enough interest to beat inflation. The only downside is that ususally there is a relativley high initial investment requried i.e $3000. You may think about using your “high yield” savings account to save enough money to start investing in the money market account of your choice. While your saving you will have enough time to research and learn more about your next, higher interest, investment vehicle. I currenly use my money market account as an emergency fund because of its high interest, ease of use, and liquidity.

I’ve signed up for a similar deal with my credit union. It’s an awesome deal and I wonder how long it will last. To maximize the benefits I’ve moved all my savings into this checking account.

I also developed an Excel spreadsheet that allocates my dollars into my various savings accounts (i.e., emergency fund, new car fund, etc.) so as not to go on a spending spree and “over draw” dipping into my savings. I’ve got a line that shows the online balance of my account, another line that deducts the pending payments/outstanding checks, another line that deducts the amounts allocated to savings/etc. The bottom line number tells me what I have left to spend or allocate.

I too considered moving my money over to Advantis or Rivermark. I currently have about $15000 laddered in 12 CDs that mature every month with an average of 4.8% interest. The main reason I’m keeping my money in the CDs is because the Advantis and Rivermark accounts are too liquid. I’m afraid I’d spend the money instead of continuing to add to it. The money I’m losing because of the lower interest rate is worth it to me because I can’t get to it as easily.

For my saving I prefer to use options where my interest rate is locked, i.e. a CD. You never know when the introductory/promotional rate on a checking account is reverted. Besides, all those requirements look like too much hassle for a percentage or so you are gaining compared to a good CD rate.

Great to see you tooting Advantis’ horn. I’ve been trying to turn Chris F onto them for a while. They are the best bank ever. And with this special account, when I signed up for it, they went through my account and told me that I was already meeting the requirements every month and that I just need to make sure I log in to check my statement every month, which I do anyway. They also let me know at the end of each month how many times I used my card and how I fared with the other requirements.

I have that Advantis account for 6.25, they are a great bank with such nice clerks, fresh baked cookies in the lobby sometimes too! I never have direct deposit tho so that account will just be kept empty until I get a job. The upside is you can keep the account if you move away from Oregon, they use other credit union ATM’s and I think US Bank’s ATM’s too.

Coulee Bank ( http://www.couleebank.net ) offers an incredible 6.01% APY with their Rewards Checking account. The rate is easy to earn. All you have to do is make 10 check card transactions a month, use e-statements, and do 1 automatic payment a month (they call it ACH). Coulee Bank pays 6.01% on the first $25,000 and 1.01% on anything above that. The best thing about this account besides the rate is it is FREE, you can apply online, and it is from a great bank with real people that answer the phone. And as they like to say, Banking Green has its Rewards. The Rewards Checking account saves paper and preserves our natural resources. No wonder I feel good about recommending this to everyone I know. Check it out. I guarantee you will love it.

Your email address will not be published. Required fields are marked *

Comment

Name *

Email *

My name is J.D. Roth. I started Get Rich Slowly in 2006 to document my personal journey as I dug out of debt. Then I shared while I learned to save and invest. Twelve years later, I've managed to reach early retirement! I'm here to help you master your money — and your life. No scams. No gimmicks. Just smart money advice to help you get rich slowly. Read more.

General Disclaimer: Get Rich Slowly is an independent website managed by J.D. Roth, who is not a trained financial expert. His knowledge comes from the school of hard knocks. He does his best to provide accurate, useful info, but makes no guarantee that all readers will achieve the same level of success. If you have questions, consult a trained professional.

Advertising Disclosure: Some offers on this page may promote affiliates, which means GRS earns a commission if you purchase products or services through the links provided. All opinions expressed here are the author's and not of any other entity. The content at Get Rich Slowly has not been reviewed, approved, or endorsed by any entity mentioned at the site. For additional information, please review our full advertising disclosure.